News

Silgan Announces Second Quarter Earnings Including Record Adjusted Earnings and Confirms Full Year Estimate

Second Quarter 2014 Highlights

Net income of $0.69 per share

14.1 percent increase in adjusted net income per share to a record
$0.73

Net sales increased 4.2 percent

Continuation of successful integration of Portola Packaging

STAMFORD, Conn.--(BUSINESS WIRE)--Jul. 23, 2014--
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for shelf-stable food and other consumer goods products, today
reported second quarter 2014 net income of $44.0 million, or $0.69 per
diluted share, as compared to second quarter 2013 net income of $59.5
million, or $0.93 per diluted share, which included a favorable tax
adjustment of $19.8 million, or $0.31 per diluted share.

“We are pleased with our second quarter 2014 results, as we delivered
record adjusted net income per diluted share of $0.73, representing a
14.1 percent increase over last year. In addition, our adjusted net
income per diluted share for the first half of 2014 increased 13.5
percent over the prior year to a record $1.26,” said Tony Allott,
President and CEO. “Our metal container business performed well, with
North American volumes in-line with expectations versus a very strong
prior year second quarter and a stronger start in Europe. Our closures
business delivered a strong operating performance and the integration of
Portola Packaging continues to go as planned. In our plastic container
business, our strategy to reposition the customer portfolio continues as
we benefited from a more favorable mix of products sold,” continued Mr.
Allott. “Based on our year-to-date performance and our outlook for the
remainder of the year, we are confirming our full year 2014 earnings
estimate of adjusted net income per diluted share in the range of $3.10
to $3.30, an increase of 13.1 percent to 20.4 percent over the prior
year,” concluded Mr. Allott.

Adjusted net income per diluted share was $0.73 for the second quarter
of 2014 as compared to $0.64 for the second quarter of 2013, after
adjustments increasing net income per diluted share by $0.04 for the
second quarter of 2014 and adjustments decreasing net income per diluted
share by $0.29 for the second quarter of 2013. A reconciliation of net
income per diluted share to “adjusted net income per diluted share,” a
Non-GAAP financial measure used by the Company which adjusts net income
per diluted share for certain items, can be found in Tables A and B at
the back of this press release. Adjustments include the net results from
operations in Venezuela because such operations are unable to import raw
materials on a regular basis due to the ongoing unstable political
environment in Venezuela and an increasingly restrictive monetary policy.

Net sales for the second quarter of 2014 were $917.3 million, an
increase of $37.3 million, or 4.2 percent, as compared to $880.0 million
in 2013. This increase was the result of an increase in net sales in the
closures business, partially offset by lower net sales in the metal
container business.

Income from operations for the second quarter of 2014 was $86.1 million,
an increase of $11.2 million, or 15.0 percent, as compared to $74.9
million for the second quarter of 2013, and operating margin increased
to 9.4 percent from 8.5 percent for the same periods. The increase in
income from operations was a result of higher income from operations
across all businesses. Income from operations included rationalization
charges of $0.9 million in each of the second quarters of 2014 and 2013.
Income from operations also included a loss from operations in Venezuela
of $2.9 million and $1.1 million in the second quarters of 2014 and
2013, respectively.

Interest and other debt expense for the second quarter of 2014 was $19.0
million, an increase of $3.6 million as compared to the second quarter
of 2013, primarily due to higher average outstanding borrowings.

The effective tax rate for the second quarter of 2014 was 34.4 percent.
The effective tax rate for the second quarter of 2013 was 33.2 percent,
excluding a favorable tax adjustment of $19.8 million primarily as a
result of the completion of the Internal Revenue Service audit for
periods through 2007.

Metal Containers

Net sales of the metal container business were $518.7 million for the
second quarter of 2014, a decrease of $12.5 million, or 2.4 percent, as
compared to $531.2 million in 2013. This decrease was primarily the
result of a decline in unit volumes of approximately 4 percent and the
financial impact from a large number of significantly longer-term
customer contract renewals and extensions recently completed, partially
offset by the impact of favorable foreign currency translation and the
pass through of higher raw material and other manufacturing costs. The
decline in unit volumes was primarily due to the comparison to a very
strong prior year quarter for the pet food and soup markets and a
delayed start to the midwest vegetable pack. These declines were
partially offset by volume gains in Europe, as the pack season had an
early start.

Income from operations of the metal container business in the second
quarter of 2014 increased $5.2 million to $50.9 million as compared to
$45.7 million in 2013, and operating margin increased to 9.8 percent as
compared to 8.6 percent in 2013. The increase in income from operations
was primarily due to lower depreciation expense and manufacturing costs,
the benefits from a higher inventory build in the second quarter of 2014
as compared to the prior year period as a result of the timing of
production during the year and improved volumes and better operating
performance in Europe. These increases were partially offset by a
decrease in unit volumes in the U.S. and the impact from customer
contract renewals. Rationalization charges were $0.3 million in the
second quarter of 2013.

Closures

Net sales of the closures business were $232.2 million in the second
quarter of 2014, an increase of $50.8 million, or 28.0 percent, as
compared to $181.4 million in 2013. This increase was primarily the
result of an increase in unit volumes due largely to the inclusion of
net sales from Portola Packaging which was acquired in October 2013 and
the impact of favorable foreign currency translation, partially offset
by lower net sales in Venezuela.

Income from operations of the closures business in the second quarter of
2014 increased $3.5 million to $25.2 million as compared to $21.7
million in 2013, while operating margin decreased to 10.9 percent from
12.0 percent over the same periods. The increase in income from
operations was primarily attributable to the inclusion of the operations
of Portola Packaging and lower manufacturing costs, partially offset by
a larger loss in Venezuela as compared to the prior year period and
higher rationalization charges. Rationalization charges were $0.9
million and $0.2 million in the second quarters of 2014 and 2013,
respectively. The loss from operations in Venezuela was $2.9 million and
$1.1 million in the second quarters of 2014 and 2013, respectively.

Plastic Containers

Net sales of the plastic container business were $166.4 million in the
second quarter of 2014, a decrease of $1.0 million, or 0.6 percent, as
compared to $167.4 million in 2013. This decrease was primarily due to a
decrease in volumes of approximately 1 percent and the impact of
unfavorable foreign currency translation, partially offset by a more
favorable mix of products sold and the pass through of higher raw
material costs. The decrease in volumes was primarily due to the ongoing
efforts to rebalance the portfolio of the business.

Income from operations of the plastic container business for the second
quarter of 2014 was $13.0 million, an increase of $1.5 million as
compared to $11.5 million in 2013, and operating margin increased to 7.8
percent from 6.9 percent over the same periods. These increases were
primarily attributable to lower depreciation expense and manufacturing
costs and a more favorable mix of products sold, partially offset by a
decrease in volumes. Rationalization charges were $0.4 million in the
second quarter of 2013.

Six Months

Net income for the first six months of 2014 was $75.5 million, or $1.18
per diluted share, as compared to net income for the first six months of
2013 of $85.0 million, or $1.30 per diluted share. Adjusted net income
per diluted share for the first six months of 2014 was $1.26 versus
$1.11 in the prior year period, after adjustments increasing net income
per diluted share by $0.08 for the first six months of 2014 and
adjustments decreasing net income per diluted share by $0.19 for the
first six months of 2013.

Net sales for the first six months of 2014 increased $97.4 million, or
5.8 percent, to $1.77 billion as compared to $1.68 billion for the first
six months of 2013. This increase was primarily the result of an
increase in unit volumes in the closures business due largely to the
inclusion of net sales from Portola Packaging, the pass through of
higher raw material costs in the metal container and plastic container
businesses, the favorable impact of foreign currency translation and a
favorable mix of products sold in the plastic container business. These
increases were partially offset by the impact of lower volumes in the
metal container and plastic container businesses, the financial impact
of customer contract renewals in the metal container business and lower
net sales in Venezuela.

Income from operations for the first six months of 2014 was $154.1
million, an increase of $21.1 million, or 15.9 percent, from the same
period in 2013. This increase was primarily a result of the inclusion of
the operations of Portola Packaging, lower depreciation expense and
manufacturing costs, a favorable mix of products sold in the plastic
container business, a higher inventory build as compared to the prior
year period in the metal container business, a smaller loss in Venezuela
compared to the prior year period and lower new plant start-up costs.
These increases were partially offset by a decrease in volumes in the
metal container and plastic container businesses and the impact of
customer contract renewals in the metal container business. Income from
operations for the first six months of 2014 included rationalization
charges of $2.5 million and a loss of $3.4 million from operations in
Venezuela. Income from operations for the first six months of 2013
included rationalization charges of $2.3 million, new plant start-up
costs of $0.8 million and a loss of $5.4 million from operations in
Venezuela which included a $3.0 million charge for the remeasurement of
net assets due to a currency devaluation.

Interest and other debt expense before loss on early extinguishment of
debt for the first six months of 2014 was $37.6 million, an increase of
$6.9 million as compared to the first six months of 2013. This increase
was primarily due to higher average debt balances. Loss on early
extinguishment of debt of $1.5 million in the first six months of 2014
was a result of the refinancing of the senior secured credit facility in
January 2014. Loss on early extinguishment of debt of $2.1 million for
the first six months of 2013 was a result of the prepayment of $300.9
million of term debt under the previous senior secured credit facility.

The effective tax rate for the first six months of 2014 was 34.4
percent, as compared to 35.0 percent for the first six months of 2013
which excludes the $19.8 million favorable adjustment primarily related
to the completion of tax audits.

Outlook for 2014

The Company confirmed its estimate of adjusted net income per diluted
share for the full year of 2014 in the range of $3.10 to $3.30, which
includes certain adjustments listed in Table B at the back of this press
release. This estimate represents an increase of 13.1 percent to 20.4
percent over record adjusted net income per diluted share of $2.74 in
the prior year.

The Company is providing an estimate of adjusted net income per diluted
share for the third quarter of 2014 in the range of $1.25 to $1.35,
which includes certain adjustments listed in Table B at the back of this
press release. This estimate compares to record adjusted net income per
diluted share of $1.23 in the third quarter of 2013. The
quarter-over-quarter comparison of adjusted net income per diluted share
includes the expected benefit from Portola Packaging, slightly higher
unit volumes in the metal container business and lower depreciation and
pension expense. These benefits are expected to be partially offset by
the financial impact from renewals of customer contracts, earlier pack
volumes realized in the second quarter in Europe, higher corporate
expense and an increase in interest expense. In addition, given the
uncertainties around the timing of the fruit and vegetable pack, the
results of the back half of the year could shift between the third and
fourth quarters.

Conference Call

Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the second quarter of 2014 at 11:00 A.M. eastern
time on July 23, 2014. The toll free number for those in the U.S. and
Canada is (888) 539-3624, and the number for international callers is
(719) 325-2118. For those unable to listen to the live call, a taped
rebroadcast will be available until August 6, 2014. To access the
rebroadcast, U.S. and Canadian callers should dial (888) 203-1112, and
international callers should dial (719) 457-0820. The pass code is
3819599.

Silgan Holdings is a leading supplier of rigid packaging for
shelf-stable food and other consumer goods products with annual net
sales of approximately $3.7 billion in 2013. Silgan operates 87
manufacturing facilities in North and South America, Europe and Asia.
Silgan is a leading supplier of metal containers in North America and
Europe and a leading worldwide supplier of metal, composite and plastic
closures for food and beverage products. In addition, Silgan is a
leading supplier of plastic containers for shelf-stable food and
personal care products in North America.

Statements included in this press release which are not historical facts
are forward looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and
the Securities Exchange Act of 1934. Such forward looking statements are
made based upon management’s expectations and beliefs concerning future
events impacting the Company and therefore involve a number of
uncertainties and risks, including, but not limited to, those described
in the Company’s Annual Report on Form 10-K for 2013 and other filings
with the Securities and Exchange Commission. Therefore, the actual
results of operations or financial condition of the Company could differ
materially from those expressed or implied in such forward looking
statements.

SILGAN HOLDINGS INC.CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)For the quarter and six
months ended June 30,(Dollars in millions, except per share
amounts)

Includes rationalization charges of $0.3 million and $1.4 million
for the three and six months ended June 30, 2013, respectively.
Includes plant start-up costs of $0.8 million for the six months
ended June 30, 2013.

(b)

Includes rationalization charges of $0.9 million and $0.2 million
for the three months ended June 30, 2014 and 2013, respectively, and
$1.5 million and $0.2 million for the six months ended June 30, 2014
and 2013, respectively. Includes losses from operations in Venezuela
of $2.9 million and $1.1 million for the three months ended June 30,
2014 and 2013, respectively, and $3.4 million and $5.4 million for
the six months ended June 30, 2014 and 2013, respectively.

(c)

Includes rationalization charges of $0.4 million for the three
months ended June 30, 2013 and $1.0 million and $0.7 million for the
six months ended June 30, 2014 and 2013, respectively.

SILGAN HOLDINGS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(UNAUDITED)For the
six months ended June 30,(Dollars in millions)

2014

2013

Cash flows provided by (used in) operating activities:

Net income

$ 75.5

$ 85.0

Adjustments to reconcile net income to net cash

used in operating activities:

Depreciation and amortization

76.5

85.6

Rationalization charges

2.5

2.3

Loss on early extinguishment of debt

1.5

2.1

Other changes that provided (used) cash, net of

effects from acquisitions:

Trade accounts receivable, net

(116.4)

(124.8)

Inventories

(234.6)

(207.0)

Trade accounts payable and other changes, net

32.2

(2.4)

Net cash used in operating activities

(162.8)

(159.2)

Cash flows provided by (used in) investing activities:

Purchases of businesses, net of cash acquired

-

(6.0)

Capital expenditures

(60.0)

(53.0)

Proceeds from asset sales

0.3

6.4

Net cash used in investing activities

(59.7)

(52.6)

Cash flows provided by (used in) financing activities:

Dividends paid on common stock

(19.4)

(18.1)

Changes in outstanding checks – principally vendors

(86.5)

(73.5)

Shares repurchased under authorized repurchase program

(7.7)

(265.3)

Net borrowings and other financing activities

309.5

216.3

Net cash provided by (used in) financing activities

195.9

(140.6)

Cash and cash equivalents:

Net decrease

(26.6)

(352.4)

Balance at beginning of year

160.5

465.6

Balance at end of period

$ 133.9

$ 113.2

SILGAN HOLDINGS INC.RECONCILIATION OF ADJUSTED NET
INCOME PER DILUTED SHARE (1)(UNAUDITED)For
the quarter and six months ended June 30,

Table A

Second Quarter

Six Months

2014

2013

2014

2013

Net income per diluted share as reported

$0.69

$0.93

$1.18

$1.30

Adjustments:

Tax audit adjustment

-

(0.31)

-

(0.30)

Rationalization charges

0.01

0.01

0.02

0.02

New plant start-up costs

-

-

-

0.01

Loss on early extinguishment of debt

-

-

0.02

0.02

Net results from operations in Venezuela

0.03

0.01

0.04

0.06

Adjusted net income per diluted share

$0.73

$0.64

$1.26

$1.11

SILGAN HOLDINGS INC.RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1)(UNAUDITED)For the quarter
and year ended,

Table B

Third QuarterSeptember
30,

Year EndedDecember 31,

Estimated

Actual

Estimated

Actual

Low2014

High2014

2013

Low2014

High2014

2013

Net income per diluted share as estimated

for 2014 and as reported for 2013

$1.24

$1.34

$1.21

$2.98

$3.18

$2.87

Adjustments:

Tax audit adjustment

-

-

-

-

-

(0.30)

Rationalization charges

0.01

0.01

0.01

0.06

0.06

0.12

New plant start-up costs

-

-

-

-

-

0.01

Costs attributable to announced acquisitions (2)

-

-

0.01

-

-

0.01

Loss on early extinguishment of debt

-

-

-

0.02

0.02

0.02

Net results from operations in Venezuela

-

-

-

0.04

0.04

0.01

Adjusted net income per diluted share

as estimated for 2014 and presented for 2013

$1.25

$1.35

$1.23

$3.10

$3.30

$2.74

(1)

The Company has presented adjusted net income per diluted share for
the periods covered by this press release, which measure is a
Non-GAAP financial measure. The Company’s management believes it is
useful to exclude rationalization charges, new plant start-up costs,
costs attributable to announced acquisitions, the loss on early
extinguishment of debt, tax adjustments for prior periods related to
the completion of Internal Revenue Service audits and net results
from operations in Venezuela, including the impact from the
remeasurement of net assets in Venezuela, from its net income per
diluted share as calculated under U.S. generally accepted accounting
principles because such Non-GAAP financial measure allows for a more
appropriate evaluation of its operating results. While
rationalization costs are incurred on a regular basis, management
views these costs more as an investment to generate savings rather
than period costs. Costs attributable to announced acquisitions
consist of third party fees and expenses that are viewed by
management as part of the acquisition and not indicative of the
on-going cost structure of the Company. Due to the political
environment in Venezuela and an increasingly restrictive monetary
policy, the operations in Venezuela are unable to import raw
materials on a regular basis. Therefore, management does not view
the net results from operations in Venezuela to be meaningful or
indicative. Such Non-GAAP financial measure is not in accordance
with U.S. generally accepted accounting principles and should not be
considered in isolation but should be read in conjunction with the
unaudited condensed consolidated statements of income and the other
information presented herein. Additionally, such Non-GAAP financial
measure should not be considered a substitute for net income per
diluted share as calculated under U.S. generally accepted accounting
principles and may not be comparable to similarly titled measures of
other companies.

(2)

Costs attributable to announced acquisitions have not been estimated
for future periods.